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Friday, July 26, 2013

More on DC United Stadium Deal

Yesterday morning, Mayor Gray and Jason Levien from DC
United, along with City Administrator Allen Lew and property owners in the
stadium footprint, announced a deal to build a new, LEED-certified 20,000 to 25,000 seat stadium
for DC United in Buzzard Point at 2nd and R streets. At the press conference,
the mayor explained the complex deal that will bring a new stadium to Southwest,
or as Lew stated, “a giant jigsaw puzzle.” The cost of the $300 million stadium
will be split between the city and the team. According to the term sheet signed by Gray and Levien after the press conference, DC United will spend $150 million to
build the stadium while the District will spend $40 million (up to a maximum of
$50 million) on infrastructure improvements/environmental remediation and
approximately $100 million for land assembly; however, the city intends not to
actually use cash to purchase land for the stadium, but instead will do a
series of land swaps.

Mayor Gray at the press conference.

A land swap that has been agreed to already is between the
District and Akridge, which owns a portion of the stadium site – the block
bounded by 2nd Street to the west, S Street to the north, First
Street to the east, and T Street to the south. The block is the northern part
of Akridge’s 100 V Street project, which was initially designed to be a secure
complex for a federal tenant. In exchange for the two-acre parcel, Akridge will
get the Reeves Center building at 14th and U streets, NW, a functionally
obsolete building in a rapidly developing part of the city. The employees at
the current Reeves building would be relocated to a new Reeves complex to be
built in Anacostia at Martin Luther King, Jr. Avenue and Good Hope Road,
SE.Meanwhile, Akridge would still
retain the southern two blocks of their 9-acre site in Buzzard Point, which presumably
would be developed as a mixed use project similar to what they have planned to
the north of Nationals Park on Half Street, SE instead of a secure federal
complex. A rendering was displayed at the press conference of their proposed
development on 14th Street, NW, but not for their remaining land at 100 V
Street. It sounds like they got a great
deal.

Stadium footprint is highlighted in red. A future streetcar station will be located adjacent to the stadium.

Agreements have not been reached yet with Pepco or Mark Ein
(owner of the Washington Kastles franchise), the other two private landowners
at the stadium site. While the term sheet dictates that the District must come
to an agreement with Akridge and Ein by January 1, 2014, there is no deadline
for an agreement with Pepco on the operating substation since it’s expected
that it will take longer to reach consensus for that parcel. The stadium design
will allow construction of the playing field to be complete and operational
without the substation block, which is on the southeastern block of the
four-block stadium site.

Aerial view of the stadium. Courtesy of Gensler

The team will be permitted to develop ancillary uses within
the stadium footprint to enhance the game day experience (retail, hotel, etc.),
but that development should be designed in such a way that it provides
amenities to the surrounding neighborhoods on non-game days. From the looks of
the overhead rendering, the playing field will take up two blocks from R Street
to T Street and one block from 2nd Street to First Street, so the
stadium can be built even if Pepco doesn’t give up their land. First Street
will curve towards Half Street north of T Street and appears to be a pedestrian
plaza (at least on game days). Ancillary development will occur on the east
side of the stadium footprint from First Street to Half Street.

The National Defense University at Fort McNair is across the street from the stadium site.

The term sheet states that the District will “pursue (i) re-sequencing
options so as to advance construction of the Buzzard Point/Downtown streetcar
line and (ii) the construction of a streetcar stop adjacent to the Stadium
Site.”No details are mentioned whether
the streetcar line would be completed before the stadium is completed in 2016.The reconstruction of Maine Avenue for The
Wharf project will be going on before then, so I imagine streetcar tracks could
be installed at that time for the portion of the line from 6th Street to 7th
Street. The District will not provide parking spaces at the site and it’s unknown
how many parking spaces will be provided on site by the team for fans.

Night time rendering of stadium. Courtesy of HKS.

At least 51% of the jobs at the stadium (excluding United
players, coaches, training staff, and front office management) will go to
District residents. In addition, at least 35% of operation contracts for the
stadium, including security, food service, janitorial services, etc., shall go
to businesses certified by DSLBD. Throughout the term of the ground lease, the
team is not permitted to leave the District of Columbia or move its principal
offices outside of the city. In addition, the team must make reasonable efforts
to locate its practice facilities within the city. The terms of the ground lease
are still being negotiated, but it will most likely be for the estimated useful
like of the stadium (25 to 35 years).

DC United Managing Partner Jason Levien and Mayor Gray sign the term sheet.

Upcoming milestones for the project include:

October 1, 2013: A transaction agreement will need to be
completed that explicitly states the terms between the District and DC United.

January 1, 2014: The District must have site control of the
stadium site, except for the Pepco substation block, as well as DC Council
approval and Congressional approval (if necessary). DC United must provide
evidence that it has the ability to fund the construction of the stadium within
30 days of the District completing the above tasks.

March 1, 2015: The District must have the site prepared for
construction, including infrastructure work and utility relocation, demolition
of existing buildings on the stadium site (except for the Pepco substation),
environmental remediation, as well as any street or alley closings.In addition, DC United must have obtained all
Zoning Commission and Zoning Adjustment approvals, as well as advanced the
stadium design at least to the design development completion level.

July 1, 2015: DC United needs to enter into a construction
contract for the stadium.

January 1, 2017: The stadium shall be substantially complete,
but both parties are aiming for completion by March 1, 2016, in time for the
beginning of the 2016 MLS season.

If the two parties do not reach the milestone dates, there
are options available for either party to walk away from the deal.

The press conference and stadium deal has been widely
reported in the press.Here are links to
some of the articles:

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